Deloitte report: Workforce reductions get deeper, more difficult to make

by Editor 5/6/2009 3:30:00 PM
Deloitte released a new study yesterday that shows how talent managers and high ranking executives worldwide are adapting their workforces to the economic crisis.

The study, “Managing Talent in a Turbulent Economy: Navigating a Course Through Rough Waters,” was conducted in association with Forbes Insights.

Here are the key findings on talent management in the present economic climate:

• Cutbacks and layoffs dominate the corporate talent agenda -- Nearly half (47 percent) of the 397 international executives questioned reported layoffs over the last three months, markedly more than those who had predicted layoffs (38 percent) in our January study. Of the companies surveyed that experienced layoffs in the last quarter, 71 percent expect more layoffs in the coming quarter.

• Workforce reductions get deeper and more difficult to make -- Forty-three percent of executives surveyed list "role necessity" as a key factor in making decisions about workforce reductions -- a 17 percentage point drop from January. Additionally, past and current performance is no guarantee of job security with less than half of managers surveyed (45 percent) reporting this is a top factor.

• Layoff survivors are also feeling the impact -- By strong margins, executives surveyed reported that over the next 12 months their companies are more likely to decrease rather than increase compensation levels (25 percent to 15 percent), benefit levels and packages (32 percent to 14 percent) and discretionary perks such as subsidized food and parking (39 percent to 12 percent). Corporate bonuses are also being pared back, with more than a third (35 percent) reporting they expect bonuses to decrease this year.

• The intersection between risk and talent remains a critical issue for all organizations surveyed -- By a 2:1 margin compared to total respondents, executives surveyed in CFO/Treasurer/Comptroller roles were more likely to disagree that employees in their firms knew how to identify fraud and other behaviors that could endanger their companies. The senior executives polled in the study expect significant challenges to persist and few of them believe that the worst is over as their workforce cuts are becoming deeper and harder to make.

Jeff Schwartz, principal, Human Capital, Deloitte Consulting LLP, says: “It is a true sign of the times as austerity measures now outrank efforts to increase sales and serve customers as top priorities for these executives. Even these companies' most skilled employees have begun to feel the pain of the weakened economy, and their managers are struggling with how best to align their workforces with the reality of what many expect to be a prolonged downturn."

The full report is available on Deloitte’s website.

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